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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Hewlett Packard Enterprise Company (NYSE:HPE).
Is HPE stock a buy? Hewlett Packard Enterprise Company (NYSE:HPE) was in 30 hedge funds' portfolios at the end of December. The all time high for this statistic is 71. HPE shareholders have witnessed a decrease in activity from the world's largest hedge funds recently. There were 34 hedge funds in our database with HPE positions at the end of the third quarter. Our calculations also showed that HPE isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Lee Ainslie of Maverick Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's take a gander at the recent hedge fund action surrounding Hewlett Packard Enterprise Company (NYSE:HPE).
Do Hedge Funds Think HPE Is A Good Stock To Buy Now?
At Q4's end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HPE over the last 22 quarters. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Pzena Investment Management held the most valuable stake in Hewlett Packard Enterprise Company (NYSE:HPE), which was worth $533 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $105.8 million worth of shares. Oldfield Partners, Renaissance Technologies, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Oldfield Partners allocated the biggest weight to Hewlett Packard Enterprise Company (NYSE:HPE), around 3.6% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 2.51 percent of its 13F equity portfolio to HPE.
Since Hewlett Packard Enterprise Company (NYSE:HPE) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there were a few fund managers that decided to sell off their entire stakes last quarter. Interestingly, Robert Pitts's Steadfast Capital Management dropped the largest stake of the "upper crust" of funds watched by Insider Monkey, valued at close to $43 million in stock, and Bernard Horn's Polaris Capital Management was right behind this move, as the fund cut about $16.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Hewlett Packard Enterprise Company (NYSE:HPE) but similarly valued. These stocks are Citizens Financial Group Inc (NYSE:CFG), 10x Genomics, Inc. (NASDAQ:TXG), Celanese Corporation (NYSE:CE), NVR, Inc. (NYSE:NVR), Cheniere Energy, Inc. (NYSE:LNG), Domino's Pizza, Inc. (NYSE:DPZ), and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). This group of stocks' market values are closest to HPE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CFG,38,453830,2 TXG,33,745283,2 CE,33,997491,7 NVR,46,1430464,4 LNG,38,2279913,-2 DPZ,37,1222281,2 ALNY,39,756924,4 Average,37.7,1126598,2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.7 hedge funds with bullish positions and the average amount invested in these stocks was $1127 million. That figure was $923 million in HPE's case. NVR, Inc. (NYSE:NVR) is the most popular stock in this table. On the other hand 10x Genomics, Inc. (NASDAQ:TXG) is the least popular one with only 33 bullish hedge fund positions. Compared to these stocks Hewlett Packard Enterprise Company (NYSE:HPE) is even less popular than TXG. Our overall hedge fund sentiment score for HPE is 13.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on HPE as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. A small number of hedge funds were also right about betting on HPE as the stock returned 33.5% since Q4 (through April 12th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.